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Does high-speed railway affect the cost behavior of tourism firms? Evidence from China

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  • Fangjun Wang
  • Lizhu Ma
  • Baojun Gao
  • Yang S Liu

Abstract

Cost stickiness, which is also termed cost asymmetry, describes the asymmetric relationship between revenue and cost. In this study, we examine whether high-speed railway (HSR) connection affects the cost stickiness of tourism firms. Employing a sample of 324 Chinese tourism firms from 2003 to 2018 and applying a difference-in-difference (DID) method, we find that the cost stickiness of tourism firms increases after HSR connection. Our results also reveal that the relationship between HSR connection and cost stickiness is more pronounced in firms with higher free cash flow (FCF), higher labor costs, and in state-owned enterprises (SOEs). Our research advances an in-depth understanding of the cost behavior in tourism firms and sheds light on the policy effect of HSR connection.

Suggested Citation

  • Fangjun Wang & Lizhu Ma & Baojun Gao & Yang S Liu, 2024. "Does high-speed railway affect the cost behavior of tourism firms? Evidence from China," Tourism Economics, , vol. 30(1), pages 212-235, February.
    • Handle: RePEc:sae:toueco:v:30:y:2024:i:1:p:212-235
    DOI: 10.1177/13548166221150698
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